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Poverty and Aspirations Failure

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  • Dalton, Patricio S; Ghosal, Sayantan; Mani, Anandi

    (University of Warwick; Tilberg University)

Abstract

This paper models the role of internal constraints in causing aspirations failure at the individual level. It shows how initial disadvantage increases the likelihood of binding internal constraints and hence aspirations failure, thus suggesting a new behavioral explanation for poverty traps. In examining common approaches to relaxing such internal constraints, it describe how an individual’s endogenous choice of a "cognitive window" (i.e. a set of relevant "similar" individuals)can limit the e¤ectiveness of role models. Further, we consider how the distribution of initial status determines the degree of connectedness in a society and hence the individual perception of these constraints. Our work provides a normative justification for programs that aim to empower participants through a direct positive shock to their aspirations.

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Bibliographic Info

Paper provided by Competitive Advantage in the Global Economy (CAGE) in its series CAGE Online Working Paper Series with number 22.

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Date of creation: 2010
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Handle: RePEc:cge:warwcg:22

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References

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  1. Martin Biewen, 2003. "Who Are the Chronic Poor?: Evidence on the Extent and the Composition of Chronic Poverty in Germany," Discussion Papers of DIW Berlin 350, DIW Berlin, German Institute for Economic Research.
  2. Karlin, Samuel & Rinott, Yosef, 1980. "Classes of orderings of measures and related correlation inequalities. I. Multivariate totally positive distributions," Journal of Multivariate Analysis, Elsevier, vol. 10(4), pages 467-498, December.
  3. Abhijit Banerjee & Sendhil Mullainathan, 2010. "The Shape of Temptation: Implications for the Economic Lives of the Poor," NBER Working Papers 15973, National Bureau of Economic Research, Inc.
  4. Galor, Oded & Zeira, Joseph, 1993. "Income Distribution and Macroeconomics," Review of Economic Studies, Wiley Blackwell, vol. 60(1), pages 35-52, January.
  5. Loewenstein, George & O'Donoghue, Ted & Rabin, Matthew, 2002. "Projection Bias in Predicting Future Utility," Working Papers 02-11, Cornell University, Center for Analytic Economics.
  6. Botond Koszegi & Matthew Rabin, 2004. "A Model of Reference-Dependent Preferences," Method and Hist of Econ Thought 0407001, EconWPA.
  7. Stutzer, Alois, 2004. "The role of income aspirations in individual happiness," Journal of Economic Behavior & Organization, Elsevier, vol. 54(1), pages 89-109, May.
  8. SHALEV, Jonathan, 1997. "Loss aversion equilibrium," CORE Discussion Papers 1997023, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  9. Eliana La Ferrara & Alberto Chong & Suzanne Duryea, 2012. "Soap Operas and Fertility: Evidence from Brazil," American Economic Journal: Applied Economics, American Economic Association, vol. 4(4), pages 1-31, October.
  10. Richard Akresh & Emilie Bagby & Damien de Walque & Harounan Kazianga, 2012. "Child Ability and Household Human Capital Investment Decisions in Burkina Faso," Economic Development and Cultural Change, University of Chicago Press, vol. 61(1), pages 157 - 186.
  11. Robert Jensen, 2010. "The (Perceived) Returns to Education and the Demand for Schooling," The Quarterly Journal of Economics, MIT Press, vol. 125(2), pages 515-548, May.
  12. Dalton, Patricio & Ghosal, Sayantan, 2008. "Behavioural Decisions and Welfare," The Warwick Economics Research Paper Series (TWERPS) 834, University of Warwick, Department of Economics.
  13. Gilboa,Itzhak & Schmeidler,David, 2001. "A Theory of Case-Based Decisions," Cambridge Books, Cambridge University Press, number 9780521003117, November.
  14. Shawn Cole & Thomas Sampson & Bilal Zia, 2011. "Prices or Knowledge? What Drives Demand for Financial Services in Emerging Markets?," Journal of Finance, American Finance Association, vol. 66(6), pages 1933-1967, December.
  15. Kim-Sau Chung, 2000. "Role Models and Arguments for Affirmative Action," American Economic Review, American Economic Association, vol. 90(3), pages 640-648, June.
  16. Robert Jensen & Emily Oster, 2007. "The Power of TV: Cable Television and Women's Status in India," NBER Working Papers 13305, National Bureau of Economic Research, Inc.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Poverty and Aspirations Failure
    by maximorossi in NEP-LTV blog on 2011-12-21 15:57:37
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Cited by:
  1. Marcus Böhme, 2012. "Migration and Education Aspirations - Another Channel of Brain Gain?," Kiel Working Papers 1811, Kiel Institute for the World Economy.
  2. Laura Camfield & Awae Masae & J. McGregor & Buapun Promphaking, 2013. "Cultures of Aspiration and Poverty? Aspirational Inequalities in Northeast and Southern Thailand," Social Indicators Research, Springer, vol. 114(3), pages 1049-1072, December.
  3. Crafts, Nicholas & Mills, Terence C, 2012. "Fiscal Policy in a Depressed Economy: Was There a ‘Free Lunch’ in 1930s’ Britain?," CAGE Online Working Paper Series 106, Competitive Advantage in the Global Economy (CAGE).
  4. Dalton, P.S. & Ghosal, S., 2010. "Behavioral Decisions and Welfare (Replaces CentER DP 2010-22)," Discussion Paper 2010-143, Tilburg University, Center for Economic Research.
  5. Solava Ibrahim, 2011. "Poverty, aspirations and wellbeing: afraid to aspire and unable to reach a better life – voices from Egypt," Brooks World Poverty Institute Working Paper Series 14111, BWPI, The University of Manchester.

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